The Land Owner Transparency Act (LOTA), expected to come into force later this year, will introduce a public registry designed to identify all individuals with beneficial ownership of real estate in BC. The intent is to help government and law enforcement address tax evasion, money laundering and fraud through hidden ownership of land. The implications are significant for developers that commonly use shell corporations, partnerships and trusts to hold or acquire interests in BC land.
While certain exemptions will apply, LOTA will require disclosure of individuals who are shareholders in a corporation, trustees in a trust or partners in a partnership that hold ownership (or leases longer than 10 years) of BC land.
Individuals with 10% or more of issued shares in a reporting corporation must be disclosed. Currently, a "beneficial interest" has not been defined.
What information must be disclosed?
The individual information to be disclosed and publicly posted on the Registry includes name, citizenship status and city of principal residence. Other information such as date of birth, social insurance and tax numbers will only be accessible by government agencies.
Information of minors will be excluded. Additionally, individuals will be able to apply to have their information excluded from the public registry under specific circumstances.
When will disclosure be required?
Disclosure of the prescribed personal information must be provided on applications to register interests in land, when there is a change of interest holders or beneficial owners (regardless of whether there is a transfer of legal title) and during the initial enforcement of LOTA when all corporations, trusts and partnerships subject to LOTA will be required to file disclosure reports to create the registry.
What happens if you don't comply?
If filing requirements are not fulfilled, the Land Title Office can refuse the registration of an interest in land. Failure to file or providing false or misleading information could also lead to fines up to the greater of $25,000 (for individuals) or $50,000 (for entities) and 5% of the assessed value of the property. More serious violations could lead to fines up to the greater of $25,000 to $50,000 (for individuals) or $50,000 to $100,000 (for entities) and 15 per cent of the assessed value of the property.
The Land Title and Survey Authority of British Columbia will be responsible for administering the Registry. The LTSA will be granted inspection powers to determine compliance under LOTA, including the authority to enter places of business or records offices as well as require individuals to provide records or answers to questions relevant to an inspection.
Regulations under LOTA have yet to be finalized and there may be additional requirements and guidance to come.
For information and resources on insurance and risk management for property developers, owners and managers, please contact a CapriCMW Risk Advisor.